Equilibrium Pricing under Concave Advertising Costs
-
Klaus Kultti
Abstract
We study Butters’s (1977. “Equilibrium Distributions of Sales and Advertising Prices.” The Review of Economic Studies 44 (3): 465–91) model under concave advertising costs, and determine a class of cost functions such that each seller sends the same finite number of ads in equilibrium. Then we consider the limit economy where the number of buyers and sellers grow indefinitely, and show that the equilibrium of the finite economy does not converge to an equilibrium in the limit economy.
References
Butters, G. R. 1977. “Equilibrium Distributions of Sales and Advertising Prices.” The Review of Economic Studies 44 (3): 465–91. https://doi.org/10.2307/2296902.Search in Google Scholar
Glicksberg, I. L. 1952. “A Further Generalization of the Kakutani Fixed Point Theorem, with Application to Nash Equilibrium Points.” Proceedings of the American Mathematical Society 3 (1): 170–4. https://doi.org/10.2307/2032478.Search in Google Scholar
Kultti, K., and T. Pekkarinen. 2021. “Equilibrium Price and Advertisement Distributions.” Journal of Mathematical Economics 97: 102535. https://doi.org/10.1016/j.jmateco.2021.102535.Search in Google Scholar
© 2022 Walter de Gruyter GmbH, Berlin/Boston
Articles in the same Issue
- Frontmatter
- Research Articles
- Duty to Read vs Duty to Disclose Fine Print. Does the Market Structure Matter?
- Cobb-Douglas Preferences and Pollution in a Bilateral Oligopoly Market
- Epsilon-Efficiency in a Dynamic Partnership with Adverse Selection and Moral Hazard
- Management Turnover, Strategic Ambiguity and Supply Incentives
- Uninformed Bidding in Sequential Auctions
- Arrowian Social Equilibrium: Indecisiveness, Influence and Rational Social Choices under Majority Rule
- Family Ties and Corruption
- Social Efficiency of Entry in a Vertical Structure with Third Degree Price Discrimination
- Insufficient Entry and Consumer Search
- Quality Competition and Market-Share Leadership in Network Industries
- The Effects of Introducing Advertising in Pay TV: A Model of Asymmetric Competition between Pay TV and Free TV
- Redistributive Unemployment Benefit and Taxation
- Constrained Persuasion with Private Information
- A Dynamic Graph Model of Strategy Learning for Predicting Human Behavior in Repeated Games
- Relative Income Concerns, Dismissal, and the Use of Pay-for-Performance
- Delegation in Vertical Relationships: The Role of Reciprocity
- Step by Step Innovation without Mutually Exclusive Patenting: Implications for the Inverted U
- Data and Competitive Markets: Some Notes on Competition, Concentration and Welfare
- Notes
- Optimality of a Linear Decision Rule in Discrete Time AK Model
- Equilibrium Pricing under Concave Advertising Costs
Articles in the same Issue
- Frontmatter
- Research Articles
- Duty to Read vs Duty to Disclose Fine Print. Does the Market Structure Matter?
- Cobb-Douglas Preferences and Pollution in a Bilateral Oligopoly Market
- Epsilon-Efficiency in a Dynamic Partnership with Adverse Selection and Moral Hazard
- Management Turnover, Strategic Ambiguity and Supply Incentives
- Uninformed Bidding in Sequential Auctions
- Arrowian Social Equilibrium: Indecisiveness, Influence and Rational Social Choices under Majority Rule
- Family Ties and Corruption
- Social Efficiency of Entry in a Vertical Structure with Third Degree Price Discrimination
- Insufficient Entry and Consumer Search
- Quality Competition and Market-Share Leadership in Network Industries
- The Effects of Introducing Advertising in Pay TV: A Model of Asymmetric Competition between Pay TV and Free TV
- Redistributive Unemployment Benefit and Taxation
- Constrained Persuasion with Private Information
- A Dynamic Graph Model of Strategy Learning for Predicting Human Behavior in Repeated Games
- Relative Income Concerns, Dismissal, and the Use of Pay-for-Performance
- Delegation in Vertical Relationships: The Role of Reciprocity
- Step by Step Innovation without Mutually Exclusive Patenting: Implications for the Inverted U
- Data and Competitive Markets: Some Notes on Competition, Concentration and Welfare
- Notes
- Optimality of a Linear Decision Rule in Discrete Time AK Model
- Equilibrium Pricing under Concave Advertising Costs
